BoJ maintains optimism on economic growth in quarterly regional report

The Bank of Japan (BoJ) has maintained optimism over the country’s economic growth prospects in the quarterly regional report released Monday. The central bank has remained positive over the country’s nine regions but mentioned that few firms are struggling to bolster prices which have fallen prey to a series of weak consumption in the country.

The lingering weakness in consumption suggests that more than three years of massive money printing has yet to nudge firms into raising prices, which has been one of the key objectives of the BoJ's stimulus programme, Reuters reported.

In its quarterly regional assessment report released on Monday, the BoJ maintained its positivity for six areas to say their economies continued to recover moderately. Also, it raised its view for two regions. However, it downgraded Tokai, where Toyota Motor Corp. and its suppliers are based, for the first time since January 2013 as the yen’s appreciation weighed on export-oriented manufacturers.

Further, the central bank is also expected to trim its inflation forecast for the next fiscal year but is seen holding off on expansion in monetary stimulus, after having revamped its policy framework. Also, a strong yen has hurt the country’s exports, forcing the BoJ to downgrade its assessment of the Tokai region.

"Households are worried that wages may not rise much when they see corporate profits fall due to the strong yen," Reuters reported, citing Kimihiro Eto, Branch Manager, BoJ, who oversees the region.

Meanwhile, the country’s retailers are struggling with weak sales as flat wage growth steals away consumer confidence. The nation's core consumer prices slid 0.5 percent in August from a year earlier to mark the sixth straight month of decline.